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Reliance gas back with a bang

New Delhi, Aug. 9: The anti-corruption branch of the Delhi government has asserted in court that it has the authority to act on an FIR filed against Reliance Industries chairman Mukesh Ambani and former Union ministers Veerappa Moily and Murli Deora that accused them of conspiring to inflate gas prices.

The affidavit in Delhi High Court today throws up an unusual situation. The Centre, then ruled by the UPA, had contended that the anti-corruption bureau had no such authority. But since then, a change of guard has taken place at both the central government and the state government.

The BJP is leading the government at the Centre now, and Delhi is now run by a lieutenant-governor, who reports to the Centre, as Arvind Kejriwal had resigned as chief minister soon after the then Delhi government pressed ahead with the Reliance FIR.

Attention will now be focused on the Narendra Modi government to gauge which course it will take on the most powerful industrial group in the country, especially since an administration that reports to the Centre has asserted its right to act on the FIR.

Delhi administration sources suggested that the anti-corruption wing would not have taken such an unequivocal stand in court without informing higher authorities. If the Centre was indeed aware of such an affidavit and still cleared it, the move can have wider ramifications.

In spite of repeated prodding in public by Kejriwal during the Lok Sabha election campaign, Modi had studiously avoided making any comment on the Reliance FIR. Of late, Kejriwal has been pushing for fresh Assembly elections in Delhi.

The gas pricing formula has not been implemented yet. The issue is pending in the Supreme Court and the new government has not taken an explicit stand on the issue.

In the affidavit in Delhi High Court, the branch cited a gazette notification issued by the Union home ministry in 1993 granting it powers to probe all Prevention of Corruption Act cases.

The Centre, then headed by the UPA, and RIL, which hold that there was no fraud in fixing gas prices, had contended that the Delhi government’s anti-corruption branch has no territorial jurisdiction to probe an offence allegedly committed by a Union ministry as this would be violative of the country’s federal structure.

The branch’s affidavit said another notification, issued in 1995 by the lieutenant governor of Delhi in exercise of powers under Section 2(s) of the CrPC, had declared the ACB would have the jurisdiction to probe all Prevention of Corruption Act-related offences.

“It is pertinent to submit here that Lt governor of the Union territory… is the Union government’s representative under Article 239 of the Constitution of India. Thus there is no violation of any federal structure,” the affidavit said.

“The ACB is not acting against the ministers or the officials of the central government, per se, but is essentially investigating into the allegations made in the complaint,” it further said.

RIL had petitioned the high court against the FIR filed in February by the then Kejriwal government against Moily, Deora, Ambani and former director-general of hydrocarbons V.K. Sibal alleging they had colluded to inflate gas prices. The FIR said this would cost the country at least Rs 54,500 crore a year and allow RIL to make a future windfall profit of Rs 1.2 lakh crore.

In 2002, RIL had won a bid for an NTPC contract to supply gas to two plants in Gujarat for $2.34 per million British thermal unit for 17 years. But in 2007, an empowered committee of ministers led by Pranab Mukherjee cleared a pricing formula that yielded a price of $4.20 per mBtu. RIL started commercial production from the gas field in the Krishna-Godavari basin in 2009.

The formula was valid for five years till April 1 this year. When it was cleared, world crude prices hovered around $30 a barrel. The formula provided for a rise in price if the crude price increased, with a cap of $60 which at that time seemed unattainable. But the global economic crisis of 2008 saw crude prices leap to over $100 a barrel.

RIL, which was getting the same price at $100 that it got at $60, started clamouring for a new formula. A committee headed by C. Rangarajan devised a formula based on an average of world gas prices at several hubs that yielded a price of $ 8.40 per mBtu, which the Kejriwal government has challenged. The next hearing is on August 19.


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